India

India's market regulator on Friday set tougher rules for the country's ratings agencies, including mandating them to more closely monitor whether issuers are meeting their debt obligations and increasing disclosure requirements, Reuters reported. Regulators and market participants argue the agencies were slow to adjust ratings of some companies that defaulted. Each of the big three global agencies - Standard & Poor's, Fitch Ratings and Moody's Investors Service - are majority owners of firms in India which operate independently of their parent companies with different rating standards.

Bad debts at Indian lenders, especially state-run banks, have climbed to a 15-year high and may increase further, a central bank study showed, Bloomberg News reported. Under the baseline scenario in a “macro stress test,” the industry’s gross bad-loan ratio may increase to 10.2 percent by March 2018 after climbing to 9.6 percent in March 2017, the highest since 2002, according to the Reserve Bank of India’s Financial Stability Report released Friday. Stressed assets, including soured debt and restructured loans, eased slightly to 12 percent in March 2017 from 12.3 percent in September 2016.

India’s benchmark index rose, snapping a three-session losing streak, on the expiry of monthly derivatives contracts as stocks across Asia advanced on optimism that a pick-up in global growth can withstand tighter financial conditions, Bloomberg News reported. The S&P BSE Sensex climbed 0.1 percent to 30,857.52 at 4:25pm in Mumbai as June derivative contracts expire. Private-sector lender Axis Bank Ltd. rose 4.1 percent after saying about 80 percent of its insolvent loans have been secured. The S&P BSE Metals Index and a gauge of consumer goods stocks were among top gainers.

The delayed $13bn takeover of India’s Essar Oil by a consortium led Rosneft has cleared its last serious obstacles, according to the Russian oil group’s chief executive Igor Sechin. Shareholders at the company’s annual general meeting in Sochi were told on Thursday by Mr Sechin that a “legal decision was received” that would allow the deal to proceed, the Financial Times reported.

Fifty-six years. That's how long it would take if the one dozen companies the Indian central bank is pushing into bankruptcy were to repay creditors by handing over their entire current operating income, Bloomberg News reported. For India's capital-starved commercial lenders, at the receiving end of much of this $37 billion of unpaid debt, waiting for even 56 days without a resolution isn't an option. Hence the nuclear strike against errant borrowers. The Reserve Bank of India has used authority it received only last month to identify 12 large corporate accounts for action.

Lanco Infratech Ltd confirmed on Saturday that India's central bank had directed the company's lead lender IDBI Bank to initiate a corporate insolvency resolution process under the country's bankruptcy laws, Reuters reported. Lanco is among 12 companies that the Reserve Bank of India (RBI) has ordered lenders to take to bankruptcy court as it strives to cut the country's $150 billion in soured debt, sources told Reuters on Friday.

India's central bank has asked lenders to initiate bankruptcy proceedings against a dozen companies, including Essar Steel, Bhushan Steel Ltd, Monnet Ispat and Energy Ltd, sources with direct knowledge of the matter said. This follows a change enacted in laws last month that gives the Reserve Bank of India greater power to address the $150 billion stressed loan problem plaguing growth in Asia's third-largest economy, Reuters reported. This week, the RBI said it had identified 12 of the country's biggest loan defaulters.

India’s central bank plans to use insolvency laws against more corporate defaulters to speed up resolution of the country’s bad loans that have swelled to $180 billion, Bloomberg News reported. “The clock’s already ticking -- some cases are already before the National Company Law Tribune," said Sanjeev Sanyal, principal economic adviser to the finance ministry. "More lists will be out in the next few months." Cleaning up India’s stressed loans is the biggest priority of Prime Minister Narendra Modi’s government, Sanyal said in an interview in New Delhi.

The Reserve Bank of India aims to stop loan officers from throwing good money after bad. This week, 12 unnamed Indian companies were recommended for referral to the Insolvency and Bankruptcy Code, the Financial Times reported. The upshot is likely to be outperformance by shares in private sector banks with consumer credit exposure. The government push could lead to long workouts for debts amounting to a quarter of all non-performing assets nationally. State-owned banks’ provision levels are likely to be revealed as insufficient.

India’s banks have been ordered to use the country’s courts to resolve bad loans totaling about 2 trillion rupees ($31 billion) issued to 12 large debtors. The Reserve Bank of India told the banks to use insolvency laws to find a solution for the debtors, which account for a quarter of the country’s total bad loans, before moving on to resolve the other problem accounts within six months, according to a statement posted on the central bank’s website late Tuesday, Bloomberg News reported.